After a long time, RBI sees a rise in outstanding NRI deposits

The month of November 2022 saw a turnaround in NRI deposits, which showed an accretion after a long gap to a level of $134.49 billion. To be fair, the progressive fall in NRI deposits had been arrested in October 2022. However, the RBI had to scale down this NRI deposit figure in October 2022 figure lower by $1.88 billion to $132.66 billion. This was by virtue of a revision in the outstanding NRE (Non-Resident External) deposits by $1.9 billion to $94.75 billion. NRE deposits are foreign currency accounts that are repatriable and normally used for foreign incomes. This scale-down pushed back the end of the falling trend by a month from October to November 2022. 

What was the reason for this surge in NRI flows in November 2022? The enhancement of NRI inflows was achieved through measures taken by the RBI in July 2022. The sops involved a relaxation of FCNR(B) (Foreign Currency Non-Resident (Bank)) interest rates as well as NRE deposits. In addition, NRIs were also exempted from maintaining statutory liquidity ratio (SLR) and cash reserve ratio (CRR) on incremental deposits until 4th November 2022. A preponderance of FCNR(B) deposits are in US dollars, at a share of around 75%, so factors like depreciating exchange rates and increased interest rates in the US can also affect NRI deposit inflows.